Is A SIPP Right For You? How To Make An Informed Decision?

There is no doubt about it; your ability to save money and optimise your earnings will have a huge bearing on your future.

This is particularly true in the current climate, with disposable income at a minimum and certain financial products under tremendous scrutiny.

Take the controversial Lifetime ISA, for example, which some experts believe should be scrapped as it sets a dangerous and unreliable precedent for those approaching retirement.

How to determine whether or not a SIPP is right for you

With this in mind, it is crucial that you display a willingness to save while also identifying the right vehicles through which to retain your money.

SIPPs (self-invested personal pension plans) are among the most coveted options at present, so it is worth appraising this type of account to determine its suitability for your needs. Consider the following: –

Do you wish to retain greater control of your Pension Plan?

For many people, standard pensions are desirable as they automatically manage funds and remove the complexities associated with a long-term investment.

If you have strong financial knowledge and an understanding of core investment markets, however, you may wish to retain greater control of your accounts, withdrawals and the way in which your money is utilised.

In this respect a SIPP is a great option to consider, as it offers you access to a more diverse set of investment opportunities and affords greater freedom in terms of withdrawing your funds.

SIPPs drive lower service fees

You will also need to consider the potential payment of annual service fees to the company managing your fund. If you partner with SIPP specialists such as Bestinvest, however, it is possible to keep these fees to a minimum and optimise the amount of available income upon maturity.

This is a common trend across all SIPPs, with annual services fees as low as 0.35 on assets of up-to £250,000 and reduced further for those with greater financial resources.

This is certainly something to consider if you are detail orientated, or have a greater source of wealth to invest in the first place.

When do you aim to retire and how do you want to receive your capital?

We have already touched on the greater flexibility of SIPPs, and this also extends to the timing of maturity and the way in which you receive your money.

More specifically, some SIPPs enable you to access your funds from as early as 55, which is ideal if your goal is to finish work early and enjoy a longer retirement.

Similarly, you may wish to withdraw 25% of your total fund in a single, lump sum, which again is relatively easy to do with a SIPP. So depending on your future goals and the plans that you have in place for your retirement, a SIPP may well be the most effective vehicle for your pension funds.